U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                -----------------

                                   FORM 10-QSB

/X/      QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED September 30, 2004

/ /      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

                        Commission file number: 001-32134
                                                ---------

                           CIRCLE GROUP HOLDINGS, INC.
        -----------------------------------------------------------------
        (Exact Name of Small Business Issuer as Specified in Its Charter)

            ILLINOIS                                         22-3768777
 -------------------------------                        ------------------
 (State or Other Jurisdiction of                         (I.R.S. Employer
  Incorporation or Organization)                        Identification No.)

                  1011 CAMPUS DRIVE, MUNDELEIN, ILLINOIS 60060
                  --------------------------------------------
                    (Address of Principal Executive Offices)

                                 (847) 549-6002
                ------------------------------------------------
                (Issuer's Telephone Number, Including Area Code)

     Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.

                                 Yes /X/       No / /

      The registrant has a single class of common stock, par value $.00005 per
share, of which there are 38,814,872 shares issued and outstanding as of
September 30, 2004.

         Transitional Small Business Disclosure Format (Alternative 2):

                                 Yes / /      No /X/

<PAGE>


                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

See Consolidated Financial Statements beginning on page F-1.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The following discussion is intended to assist in understanding the financial
condition and results of operations of Circle Group Holdings, Inc. You should
read the following discussion along with our financial statements and related
notes included in this Form 10-QSB. The following discussion contains
forward-looking statements that are subject to risks, uncertainties and
assumptions. Our actual results, performance and achievements in 2004 and beyond
may differ materially from those expressed in, or implied by, these forward
looking statements.

OVERVIEW

Circle Group Holdings, Inc. (hereinafter referred to as "Circle Group", the
"Company", "we", "us", or "our") is a pioneer of emerging technology companies.
We provide small business infrastructure, funding and substantial intellectual
capital to bring important and timely life-changing technologies to the
marketplace through all phases of the commercialization process.

Circle Group was founded in May 1994 under the original name, Circle Group
Entertainment Ltd. and changed its name to Circle Group Holdings, Inc. in 2002.
The Company had no business operations except for research and development
activities between May 1994 and January 1997. In 2002, the Company reorganized
its business units into three reportable segments: food product development,
security product development, and e-tailor, and acquired Fiber-Gel Technologies,
Inc., which owns an exclusive license to Z-Trim, an all-natural, corn-based fat
replacement.

We have four operating subsidiaries: Fiber-Gel Technologies, Inc.,
thebraveway.com, Inc., operating as The Brave Way Training Systems, On-Line
Bedding Corp., and Z-Amaize Technologies, Inc., and have exclusive worldwide
licenses to the Nutrition Analysis Tool website, Mini-Raman Lidar System, and
ThraxVac technology.

RECENT DEVELOPMENTS



<PAGE>




In September 2004 Circle Group entered into an agreement with Gassman Engineers,
Inc. and Meridian Mechanical Corporation to develop a commercial version of its
Lidar(TM) and ThraxVac(TM) technologies, which were originally developed at the
U.S. Department of Energy's Brookhaven National Laboratory.

On September 28, 2004, Z-Amaize Technologies signed an agreement to provide
NOVOC Performance Resins with Z-Bind for use in its products. NOVOC has
identified a use for a neutral pH version of Z-Bind in which they could use up
to several million pounds per year once fully commercialized, and the agreement
also provides for the joint development of additional versions of Z-Bind.

In September 2004 Z-Amaize Technologies, entered into an agreement valued at
$2.6 million over three years to supply its newest product Z-Bind to Senticore,
Inc.

On August 25, 2004 Circle Group commemorated the opening of its new production
facility in Mundelein, Illinois with an official ribbon cutting ceremony. When
fully operational the eco-compliant facility will be capable of producing up to
one million pounds annually of Z-Trim(TM). In addition, the plant will also be
able to produce up to ten million gallons of Z-Bind(TM) adhesive resin and
polymer extenders for use by the plywood, concrete and construction industries.


<PAGE>


RESULTS OF OPERATIONS

THREE AND NINE MONTH PERIODS ENDING SEPTEMBER 30, 2004 COMPARED TO THE SAME
PERIODS ENDING SEPTEMBER 30, 2003

Revenues

Revenues increased 33.4% for the three months ended September 30, 2004 from
$130,783 for the three months ended September 30, 2003 to $174,409, as a result
of an increase of $47,490 in product revenue, partially offset by a decrease of
$3,864 in service revenue. The increase in product revenue was primarily due to
the introduction of the Z-Trim products and the increase in demand by e-tailer
customers. The decrease in service revenue was primarily due to slower demand in
security training services segment. Revenues decreased slightly by 2.6% for the
nine months ended September 30, 2004 from $530,872 for the nine months ended
September 30, 2003 to $516,936, as a result of the slower demand in e-tailer
products, security training and business consulting services, partially offset
by the revenue generated by Z-Trim products of $49,111. The following table
provides a breakdown of the revenues for our divisions for the periods
indicated:

                                              Three months ended September 30,
                                                 2004               2003
                                              ---------          ---------
               Products                       $ 174,885          $ 127,395
               Services                            (476)             3,388
                                              ---------          ---------
            Total Revenues                    $ 174,409          $ 130,783
                                              =========          =========

                                              Nine months ended September 30,
                                                 2004               2003
                                              ---------          ---------
               Products                       $ 486,880          $ 453,892
               Services                          30,056             76,980
                                              ---------          ---------
            Total Revenues                    $ 516,936          $ 530,872
                                              =========          =========


Operating expenses

Operating expenses consist of payroll and related costs, insurance, occupancy
expenses, professional fees, and general operating expenses. Total operating
expenses increased to $990,806 for the three months ended September 30, 2004
from $917,685 for the three months ended September 30, 2003, Total operating
expenses for the nine month period ending September 30, 2004 increased to
$3,480,210 for the nine months ended September 30, 2004 from $1,514,863 for the
nine month period ending September 30, 2003. The increase in operating expenses
was primarily due to introduction and promotion of Z-trim products, and the
increase in investor and public relation expenses.

Other income

Total other income for the three months ended September 30, 2004 was $964,729 up
from a deficit of $2,388 for the comparable period in fiscal 2003. Total other
income for the nine months ended September 30, 2004 was $993,841 up from
$241,544 for the comparable period in fiscal 2003. Other income for nine months

<PAGE>


ended September 30, 2004 included a settlement of $950,000 received from former
legal counsel. Other income for nine months ended September 30, 2003 included a
refund of $48,750 by a consultant of which the service was expensed in 2002, and
a gain on sale of a trademark of $150,000.

Net loss

The Company reported a net income for the third quarter of 2004 of $56,827 or
$0.00 per share. The reported net income primarily included a settlement gain of
$950,000 received from former legal counsel. Net of this gain, the Company
incurred a net loss of $893,173 or $0.02 per share, a 6.7% improvement from the
net loss of $957,513 or $0.03 per share for the third quarter of 2003. For the
nine months ending September 30, 2004, the Company reported a net loss of
$2,529,285 or $0.07 per share or a 100% increase from the net loss of $1,342,465
or $0.05 per share for the nine month period ending September 30, 2003. This was
due to a combination of the building of the new Fiber-Gel Technologies
production facility and product development and introduction and promotion of
Z-trim products, and an increase in investor and public relation expenses.

LIQUIDITY AND CAPITAL RESOURCES

At September 30, 2004, we had cash and cash equivalents of $602,741, compared to
$1,688,581 at September 30, 2003 and $1,383,718 at December 31, 2003. The
Company has generated approximately $4,954,839 in additional operating capital
through the sale of its common stock in a private placement offering and options
and warrant exercises during the first nine months of 2004.

Net cash used by operating activities decreased by 44.6% to $468,150 for the
nine months ended September 30, 2004 as compared to $844,496 for the nine months
ended September 30, 2003. The decrease resulted primarily from our net loss of
$2,529,285, partially offset by depreciation and amortization of $124,986,
noncash expenses of $777,652, and an increase from the change in liabilities
over assets of approximately $1.16 million.

Net cash used by investing activities was $5,249,104 for the nine months ended
September 30, 2004, primarily resulting from the additions of property and
equipment for our Z-trim manufacturing facility. Net cash provided by investing
activities was $150,572 for the nine months ended September 30, 2003, primarily
resulting from the proceeds of $150,000 we received from the sale of a
trademark.

Net cash provided by financing activities was $4,936,277 for the nine months
ended September 30, 2004 compared to $2,260,046 for the nine months ended
September 30, 2003, primarily due to proceeds from the sale of our stock and
from the exercising of options and warrants of approximately $4.9 million.

To successfully grow the individual segments of our business, we must improve
our cash position, and the revenue base of each segment, as well as continue to
succeed in our ability to raise additional capital through a combination of
public or private equity offerings or strategic alliances. We also depend on
certain important employees, and the loss of any of those employees may harm the
business and its prospects.

<PAGE>


FACTORS THAT MAY AFFECT FUTURE RESULTS

The following risks are material risks that we face. If any of the following
risks occur, the business of the Company and its operating results could be
seriously harmed.

OUR SUCCESS IS DEPENDENT ON MARKET ACCEPTANCE OF OUR PRODUCT.

We have not conducted, nor have others made available to us, results of market
research indicating how much market demand exists for Z-Trim, our fat
replacement product. We are relying on the current concerns over obesity,
weight-health issues, and the rising cost of health care to drive demand for
Z-Trim in the marketplace. Consequently, we cannot assure you that we will be
able to gain the market acceptance necessary to achieve profitability.

WE MAKE NO PROJECTIONS REGARDING THE VIABILITY OF OUR FAT REPLACEMENT PRODUCT
AND WE CANNOT ASSURE YOU THAT WE WILL ACHIEVE THE RESULTS DESCRIBED.

We make no projection with respect to our future income, assets or business. No
expert has reviewed our business plan for accuracy or reasonableness. It is
likely that our actual business and results of operations will differ from those
presented herein.

WE MAY NEED ADDITIONAL FUNDING AND SUCH FUNDING MAY NOT BE AVAILABLE. IF SUCH
FUNDING IS AVAILABLE, IT MAY NOT BE OFFERED ON SATISFACTORY TERMS.

We may require additional financing to fund ongoing operations if our sales and
revenue growth are insufficient to meet our operating costs. Our inability to
obtain necessary capital or financing to fund these needs could adversely affect
our ability to fund operations and continue as a going concern. Our inability to
obtain necessary capital or financing to fund these needs could adversely affect
our business, results of operations and financial condition. Additional
financing may not be available when needed or may not be available on terms
acceptable to us. If adequate funds are not available, we may be required to
delay, scale back or eliminate one or more of our business segments, which may
affect our overall business, results of operations and financial condition.

THE LOSS OF SERVICE OF KEY MANAGEMENT COULD HAVE A NEGATIVE IMPACT ON OUR
PERFORMANCE.

Our success depends to a significant degree upon the performance of our founder
and Chief Executive Officer, Gregory J. Halpern. The loss of service of Mr.
Halpern could have a material adverse effect on our operating performance and
viability as a going concern. Further, we are dependent upon our ability to
attract and retain highly skilled managerial personnel. We believe that our
future success in developing marketable products and achieving profitability
will depend in large part upon whether we can attract and retain skilled
personnel.

OUR MANAGEMENT CURRENTLY BENEFICIALLY OWNS A SIGNIFICANT PERCENTAGE OF OUR
COMMON STOCK.

Ownership of Circle Group is concentrated in management. As of September 30,
2004, Gregory J. Halpern, our Chairman and Chief Executive Officer, owns
approximately 32% of the Company's common stock and all of the directors and
officers collectively own approximately 37%. As a result holders of our common
stock can be out-voted by management in most circumstances and thereby
management can control the composition of our board of directors and our
policies.

<PAGE>


WE MAY EXPAND OUR OPERATIONS BY MAKING ACQUISITIONS WHICH COULD SUBJECT US TO A
NUMBER OF OPERATIONAL RISKS.

In order to grow our business, we may expand our operations by acquiring other
businesses in the future. We cannot predict whether or when any acquisitions
will occur. Acquisitions commonly involve certain risks, and we cannot assure
you that any acquired business will be successfully integrated into our
operations or will perform as we expect. Any future acquisitions could involve
certain other risks, including the assumption of additional liabilities,
potentially dilutive issuances of equity securities and diversion of
management's attention from other business concerns We may also enter into joint
venture transactions. Joint ventures have the added risk that the other joint
venture partners may have economic, business or legal interests or objectives
that are inconsistent with our interests and objectives.

OUR INABILITY TO SECURE AND PROTECT OUR INTELLECTUAL PROPERTY MAY RESULT IN
COSTLY AND TIME-CONSUMING LITIGATION AND COULD IMPEDE US FROM EVER ATTAINING
MARKET SUCCESS.

We hold several patents as well as copyrights and trademarks with respect to our
products and expect to continue to file applications in the future as a means of
protecting our intellectual property. In addition, we seek to protect our
proprietary information and know-how through the use of trade secrets,
confidentiality agreements and other similar security measures. With respect to
patents, there can be no assurance that any applications for patent protection
will be granted, or, if granted, will offer meaningful protection. Additionally,
there can be no assurance that competitors will not develop, patent or gain
access to similar know-how and technology, or reverse engineer our products, or
that any confidentiality agreements upon which we rely to protect our trade
secrets and other proprietary information will be adequate to protect our
proprietary technology. The occurrence of any such events could have a material
adverse effect on our results of operations and financial condition.

OUR STOCK PRICE MAY DROP UNEXPECTEDLY DUE TO SHORT SELLING OF OUR COMMON STOCK
IN THE MARKET.

We have experienced and may continue to experience unexpected decline in our
stock price due to manipulation of the market by individuals who profit by short
selling our common stock. Short selling occurs when an individual borrows shares
from an investor through a broker and then sells those borrowed shares at the
current market price. The "short seller" profits when the stock price falls
because he or she can repurchase the stock at a lower price and pay back the
person they borrowed, thereby making a profit. We cannot assure you that short
sellers will not continue to drive the stock price down in the future, causing
decline in the value of your investment.

THE FLUCTUATION IN OUR STOCK PRICE MAY RESULT IN A DECLINE IN THE VALUE OF YOUR
INVESTMENT.

The price of our common stock may fluctuate widely, depending upon many factors,
including the differences between our actual financial and operating results and
those expected by investors and analysts, changes in analysts' recommendations
or projections, short selling of our stock in the market, changes in general
economic or market conditions and broad market fluctuations. Companies that
experience volatility in the market price of their securities often are subject
to securities class action litigation. This type of

<PAGE>


litigation, if instituted against us, could result in substantial costs and
divert management's attention and resources away from our business.

FORWARD-LOOKING STATEMENTS

When used in this Form 10-QSB and in future filings by us with the Securities
and Exchange Commission, in our press releases or other public or shareholder
communications, and in oral statements made with the approval of an authorized
executive officer, the words "believes," "intends," "expects," "may," "will,"
"should," "plan," "projected," "contemplates," "anticipates," or similar
statements are intended to identify forward-looking statements. Our ability to
predict results or the actual effect of future plans or strategies are
uncertain.

Factors which could have a material adverse effect on our operations include,
but are not limited to, market acceptance of Z-Trim, general economic
conditions, availability of additional financing on acceptable terms,
legislative/regulatory changes, competition, demand for financial services in
our market areas and accounting principles and guidelines. These risks and
uncertainties should be considered in evaluating forward-looking statements and
you should not place undue reliance on these forward-looking statements, which
apply only as of the date of this filing. We undertake no obligation to release
publicly the result of any revisions to these forward-looking statements that
may be made to reflect events or circumstances after the date of this Form
10-QSB or to reflect the occurrence of unanticipated events.

ITEM 3.  CONTROLS AND PROCEDURES

The Company's Chief Executive Officer and Chief Financial Officer have concluded
that the Company's disclosure controls and procedures (as defined pursuant to
Rule 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934), based on
their evaluation of such controls and procedures as of the end of the period
covered by this report, are effective to ensure that information required to be
disclosed by the Company in the reports it files under the Securities Exchange
Act of 1934, as amended, is recorded, processed, summarized and reported within
the time periods specified in the rules and forms of the Securities and Exchange
Commission and that such information is accumulated and communicated to the
Company's management, including its Chief Executive officer and Chief Financial
Officer, as appropriate to allow timely decisions regarding required disclosure.

There have been no changes in the Company's internal controls over financial
reporting identified in connection with management's evaluation that occurred
during the Company's last fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the Company's internal control over
financial reporting.

<PAGE>


                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

On February 20, 1997, the Company registered the domain name, (justdoit.net),
and thereafter began using it as the Company's primary website and e-mail
domain. Nike subsequently initiated proceedings with the WIPO (World
Intellectual Property Organization) in an effort to cause the Company to turn
over the (justdoit.net) domain to Nike. The Company won a favorable decision
from the WIPO. On October 7, 2002, Nike filed a federal
lawsuit in the United District Court for the Northern District of Illinois
against the Company in Nike, Inc. v. Circle Group Internet, Inc., alleging
violations of the ACPA (Anti-Cybersquatting Consumer Protection Act), the Lanham
Act and state unfair competition laws. On May 21, 2004, the judge in the matter
granted Nike's motion for judgment as a matter of law. Damages have not yet been
awarded. On August 31, 2004, Nike file an amended complaint, thus, reopening
discovery proceedings, which are currently underway.

In August 2004, a complaint was filed in the United States District Court for
the Southern District of New York against the Company in Richard M. Wexler v.
Circle Group Holdings, Inc. The matter has been removed to federal court. In the
complaint, the plaintiff alleges that the Company breached a contract by failing
to issue freely trading and registered common stock pursuant to plaintiff's
exercise of certain warrants. The Company has filed a motion to dismiss the case
or transfer to Illinois on the grounds of lack of personal jurisdiction, venue
or forum non conveniens. A ruling on the motion is expected in the first or
second quarter of
2005.

In September 2004, a second complaint alleging similar claims to those made in
Richard M. Wexler v. Circle Group Holdings, Inc. was filed in the United States
District Court for the Northern District of Illinois against the Company in
Willow Cove Investment Group, Inc. v. Circle Group Holdings, Inc. The Company
filed a motion to dismiss. The plaintiff has decided not to respond to the
Company's motion to dismiss but rather file an amended complaint. The Company is
waiting for the amended complaint to be filed and plans to respond accordingly.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

        (a)     Exhibits

Exhibit             Description
No.                 -----------
------
3.1     Articles of Incorporation of Circle Group Holdings, Inc. [Incorporated
        by reference to Exhibit 2.1 to Circle Group's Form 10-SB, as amended,
        filed on August 21, 2000]

3.2     Bylaws of Circle Group Holdings, Inc. [Incorporated by reference to
        Exhibit 2.2 to Circle Group's Form 10-SB, as amended, filed on August
        21, 2000]

3.3     Amendment to Articles of Incorporation of Circle Group Holdings, Inc.
        filed on June 25, 2004 [Incorporated by reference to Exhibit 3.3 to
        Circle Group's Form 10-QSB filed on August 16, 2004]

<PAGE>


4.1     Specimen Certificate for common stock [Incorporated by reference to
        Exhibit 3.1 to Circle Group's Form 10-SB, as amended, filed on August
        21, 2000]

10.1    Gregory J. Halpern Employment Agreement, dated January 2, 1999 and
        Addendum [Incorporated by reference to Exhibit 6.1 to Circle Group's
        Form 10-SB, as amended, filed on August 21, 2000]

10.2    Michael Theriault Employment Agreement, dated June 1, 1999 [Incorporated
        by reference to Exhibit 6.3 to Circle Group's Form 10-SB, as amended,
        filed on August 21, 2000]

10.3    Dana Dabney Employment Agreement, dated January 2, 1999 [Incorporated by
        reference to Exhibit 6.4 to Circle Group's Form 10-SB, as amended, filed
        on August 21, 2000]

10.5    Circle Group Holdings, Inc. 2004 Equity Incentive Plan [Incorporated by
        reference to Exhibit 10.5 to Circle Group's Form S-3 filed on June 25,
        2004]

10.6    Industrial Lease Agreement between CLO Enterprises and Circle Group
        Holdings, Inc., dated May 20, 1999 [Incorporated by reference to Exhibit
        6.6 to Circle Group's Form 10-SB, as amended, filed on August 21, 2000]

10.7    Industrial Lease Agreement between CLO Enterprises and Circle Group
        Holdings, Inc., dated June 18, 1999 [Incorporated by reference to
        Exhibit 6.7 to Circle Group's Form 10-SB, as amended, filed on August
        21, 2000]

10.8    Stock Purchase Agreement, dated December 20, 2002, by and between CGI
        Capital and Rothschild Owens Hayes & Partners, Inc. [Incorporated by
        reference to Exhibit 6.8 to Circle Group's Form 10-KSB filed on April
        14, 2003]

10.9    Promissory Note, Dated November 30, 2002, delivered by Circle Group
        Holdings, Inc. in favor of Edward L. Halpern Incorporated by reference
        to Exhibit 6.11 to Circle Group's 10-KSB filed on April 14, 2003]

10.10   Asset Purchase Agreement, dated August 27, 2002, by and between Circle
        Group Holdings, Inc. and Utek Corporation [Incorporated by reference to
        Circle Group's Form 8-K filed on September 11, 2002]

31.1*   Statement Under Oath of Principal Executive Officer of the Company
        Pursuant to Section 302 of Sarbanes-Oxley Act of 2002

31.2*   Statement Under Oath of Principal Financial Officer of the Company
        Pursuant to Section 302 of Sarbanes-Oxley Act of 2002

32.1*   Statement Under Oath of Principal Executive Officer of the Company
        Pursuant to Section 906 of Sarbanes-Oxley Act of 2002

32.2*   Statement Under Oath of Principal Financial Officer of the Company
        Pursuant to Section 906 of Sarbanes-Oxley Act of 2002

---------------------
* Filed herewith.

        (b)     Reports on Form 8-K.

On August 16, 2004, Circle Group Holdings, Inc. furnished a Current Report on
Form 8-K pursuant to Item 7 and 12 in connection with its issuance of a press
release announcing its financial results for the second quarter of fiscal 2004
ended June 30, 2004.

<PAGE>


                           CIRCLE GROUP HOLDINGS, INC.
                                AND SUBSIDIARIES


                          Index to Financial Statements
                          -----------------------------


Consolidated Balance Sheet at
  June 30, 2004 (unaudited) ........................................... F-1

Consolidated Statement of
  Operations as of September 30, 2004 (unaudited) .......................... F-2

Consolidated Statements of
  Cash Flows as of September, 2004 (unaudited) .......................... F-3

Notes to Interim Unaudited
  Consolidated Financial Statements.................................... F-4

<PAGE>


CIRCLE GROUP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (UNAUDITED)

SEPTEMBER 30, 2004
--------------------------------------------------------------------------------


                                     ASSETS
Current Assets
  Cash and cash equivalents                                      $      602,741
  Accounts receivable, net of allowance for doubtful
    accounts of $6,692                                                   88,792
  Prepaid expenses                                                       37,323
  Inventories                                                            62,847
                                                                 --------------
    TOTAL CURRENT ASSETS                                                791,703
                                                                 --------------

Property and Equipment, net of accumulated depreciation
  of $919,833                                                         5,867,956
                                                                 --------------

Other Assets
  Deposits                                                               11,103
  Purchased intangible assets, net                                      571,832
                                                                 --------------
    Total other assets                                                  582,935
                                                                 --------------

TOTAL ASSETS                                                     $    7,242,594
                                                                 ==============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
  Accounts payable                                               $       85,879
  Accrued expenses and other current liabilities                      1,469,832
  Notes payable to related parties                                       25,000
  Capital lease obligations, current portion                             28,901
                                                                 --------------
    Total current liabilities                                         1,609,612

Capital lease obligations, net of current portion                        53,406
                                                                 --------------

    TOTAL LIABILITIES                                                 1,663,018
                                                                 --------------

Minority Deficit                                                        (58,711)

Stockholders' Equity
  Common stock, $0.00005 par value; 50,000,000 shares
    authorized; 38,914,872 shares issued and outstanding                  1,946
  Common stock to be issued                                                  22
  Additional paid-in capital                                         33,376,928
  Notes receivable for issuance of stock                             (2,290,000)
  Accumulated deficit                                               (25,439,340)
  Treasury stock, at cost                                               (11,269)
                                                                 --------------
    TOTAL STOCKHOLDERS' EQUITY                                        5,638,287
                                                                 --------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                       $    7,242,594
                                                                 ==============

SEE NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

<PAGE>


CIRCLE GROUP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

<TABLE>
<CAPTION>
                                                     For Three Months ended            For Nine Months ended
                                                         September 30,                     September 30,
                                                     2004             2003             2004             2003
----------------------------------------------------------------------------------------------------------------
                                                                   (Restated)                        (Restated)
<S>                                              <C>              <C>              <C>              <C>
Revenues:
  Products                                       $    174,885     $    127,395     $    486,880     $    453,892
  Services                                               (476)           3,388           30,056           76,980
================================================================================================================
    Total revenues                                    174,409          130,783          516,936          530,872
================================================================================================================

Cost of revenues:
  Products                                            122,366           55,597          453,959          314,625
  Services                                            (30,861)         112,626          105,893          285,393
================================================================================================================
    Total cost of revenues                             91,505          168,223          559,852          600,018
================================================================================================================

Operating expenses:
  Selling, general and administrative                 982,222          914,352        3,454,459        1,511,530
  Amortization of intangible assets                     8,584            3,333           25,751            3,333
================================================================================================================
    Total operating expenses                          990,806          917,685        3,480,210        1,514,863
================================================================================================================

================================================================================================================
     OPERATING (LOSS)                                (907,902)        (955,125)      (3,523,126)      (1,584,009)
================================================================================================================

Other incomes (expenses):
  Rental and other income                              15,507           20,309           49,452          127,027
  Interest income                                       1,626            1,008            6,249            1,997
  Settlement gain                                     951,000                0          953,000                0
  Interest Expense                                     (3,404)         (23,705)         (14,860)         (43,034)
  Gain on disposal of long-lived assets                     0                0                0          155,554
================================================================================================================
    Total other incomes (expenses)                    964,729           (2,388)         993,841          241,544
================================================================================================================

================================================================================================================
     NET INCOME (LOSS)                           $     56,827     $   (957,513)    $ (2,529,285)    $ (1,342,465)
================================================================================================================

================================================================================================================
Net income (loss) per share-basic and diluted    $       0.00     $      (0.03)    $      (0.07)    $      (0.05)
================================================================================================================

Weighted Average Number of Shares                  38,844,872       27,620,651       36,913,063       25,961,513
</TABLE>


SEE NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

<PAGE>


CIRCLE GROUP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

<TABLE>
<CAPTION>
FOR NINE MONTHS ENDED SEPTEMBER 30,                                                   2004             2003
---------------------------------------------------------------------------------------------------------------
<S>                                                                               <C>              <C>
Cash Flows From Operating Activities:
  Net income (loss)                                                               $ (2,529,285)    $ (1,342,465)
  Adjustments to reconcile net income (loss) to net cash (used in) operations:
   Minority Deficit                                                                    (47,385)               0
   Depreciation and amortization                                                       124,986          114,184
   Issuance of common stocks and warrants for services                                 379,170          826,255
   Gain on disposal of long-lived assets                                                     0         (155,554)
   (Gain) on sale of subsidiary                                                              0           (8,635)
   Amortization of noncash expenses                                                    445,867                0
   (Increase) decrease in:
     Accounts receivable, net                                                          (19,635)         (26,192)
     Inventory                                                                         (44,798)          (4,241)
     Prepaid expenses and other assets                                                 (21,004)             504
   Increase (decrease) in:
     Accounts payable and accrued expenses                                           1,243,934         (248,352)
---------------------------------------------------------------------------------------------------------------
   NET CASH (USED IN) OPERATING ACTIVITIES                                            (468,150)        (844,496)
---------------------------------------------------------------------------------------------------------------

Cash Flows From Investing Activities:
  Employee loans and advances                                                                0          (15,803)
  Proceeds from disposition of property and equipment                                      650            6,375
  Proceeds from sale of intangible assets                                                    0          150,000
  Proceeds from sale of subsidiary                                                           0           10,000
  Purchase of property and equipment                                                (5,249,754)               0
---------------------------------------------------------------------------------------------------------------
   NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                              (5,249,104)         150,572
---------------------------------------------------------------------------------------------------------------

Cash Flows From Financing Activities:
  Exercise of stock options and warrants                                             2,193,664          108,687
  Net proceeds from sale of stock                                                    2,761,175          250,000
  Net proceeds from stock subscription                                                       0          979,220
  Net proceeds from subsidiary stock offering                                                0          950,000
  Net payments on capital lease obligations                                            (18,562)         (13,761)
  Repayments to officers                                                                     0          (14,100)
===============================================================================================================
   NET CASH PROVIDED BY FINANCING ACTIVITIES                                         4,936,277        2,260,046
===============================================================================================================

     NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                             (780,977)       1,566,122

Cash and cash equivalents, at beginning of period                                    1,383,718          122,459
                                                                                  -----------------------------

===============================================================================================================
CASH AND CASH EQUIVALENTS, AT END OF PERIOD                                       $    602,741     $  1,688,581
===============================================================================================================

Supplemental Disclosures of Cash Flow Information:
    Interest paid                                                                 $     14,860     $      2,238

Supplemental schedule of noncash investing and financing activities:
  Note receivable incurred for issuance of stocks                                 $  2,290,000     $     50,000
  Issuance of stocks to acquire license rights                                    $          0     $    275,000
  Retirement of common stock to reduce employee loan                              $          0     $     10,000
  Exercising of stock options to retire note payable                              $          0     $    193,500
</TABLE>

SEE NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

<PAGE>


CIRCLE GROUP HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business
------------------

Circle Group Holdings,  Inc. (the "Company") is a pioneer of emerging technology
companies.  The  Company  provide  small  business  infrastructure,  funding and
substantial  intellectual  capital to bring  important and timely  life-changing
technologies  to the  marketplace  through  all phases of the  commercialization
process.

The Company has  participated  in several  public and private  offerings and has
expanded its business.  In 2002, the Company reorganized its business units into
three  reportable   segments:   food  product   development,   security  product
development,   and   e-tailor   and  acquired   Fiber-Gel   Technologies,   Inc.
("Fiber-Gel"),  which  owns an  exclusive  license to  Z-Trim,  an  all-natural,
corn-based fat replacement.

Circle  Group  operates  through its  Fiber-Gel,  Mini-Raman  Lidar  Technology,
ThraxVac  Technology,  The Brave Way Training  Systems,  Inc.,  Consulting  CGI,
On-Line Bedding Corp., and Z-Amaize Technologies, Inc. divisions.

On March 31, 2004, the Company's  common stock was approved to be trading on the
American Stock Exchange under the symbol, CXN.

A summary of significant accounting policies follows.

Presentation of Interim Information
-----------------------------------

The  financial  information  at  September  30,  2004 and for the three and nine
months  ended  September  30,  2004  and 2003 is  unaudited,  but  includes  all
adjustments  (consisting only of normal recurring  adjustments) that the Company
considers  necessary for a fair  presentation  of the financial  information set
forth herein, in accordance with accounting principles generally accepted in the
United  States ("U.S.  GAAP") for interim  financial  information,  and with the
instructions  to Form 10-QSB and Item 310 (b) of  Regulation  S-B.  Accordingly,
such information does not include all of the information and footnotes  required
by U.S. GAAP for annual financial statements. For further information,  refer to
the  consolidated  financial  statements and footnotes  thereto  included in the
Company's annual Report on Form 10-KSB for the year ended December 31, 2003.

The results for the three and nine months  ended  September  30, 2004 may not be
indicative  of  results  for the year  ending  December  31,  2004 or any future
periods.

Principle of Consolidation and Presentation
-------------------------------------------

The  accompanying  consolidated  financial  statements  include the  accounts of
Circle  Group  Holdings  Inc.  and its  subsidiaries  after  elimination  of all
intercompany accounts and transactions.  Certain prior period balances have been
reclassified to conform to the current period presentation.

NOTE 2 - GOING CONCERN

The Company's  consolidated  financial  statements have been prepared on a going
concern basis,  which  contemplates the realization of assets and the settlement
of liabilities  and  commitments  in the normal course of business.  In the near
term, the Company expects  operating costs to continue to exceed funds generated
from operations. As a result, the Company expects to continue to incur operating
losses and may not have enough  money to grow its  business  in the future.  The
Company can give no assurance that it will achieve  profitability  or be capable
of sustaining profitable operations.  As a result, operations in the near future
are expected to continue to use working capital.

<PAGE>


CIRCLE GROUP HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 2 - GOING CONCERN (CONTINUED)

To successfully grow the individual  segments of the business,  the Company must
decrease its cash burn rate,  improve its cash  position and the revenue base of
each segment,  and succeed in its ability to raise additional  capital through a
combination  of  primarily  public or  private  equity  offerings  or  strategic
alliances. The Company also depends on certain important employees, and the loss
of any of those employees may harm the Company's business.

The Company has  generated  approximately  $4,954,839  in  additional  operating
capital during the year through sales of its common stock in a private placement
offering and in exercising of options and warrants.

NOTE 3 - PRO PORMA STOCK COMPENSATION EXPENSES

In accordance with Statement of Financial  Accounting Standard ("SFAS") No. 123,
"Accounting  for  Stock-Based   Compensation,"  as  amended  by  SFAS  No.  148,
"Accounting  for  Stock-Based   Compensation--Transition  and  Disclosure,"  the
Company  elected to continue to account for its employee stock options under the
intrinsic  value based method of  accounting  prescribed  by APB Opinion No. 25,
"Accounting  for Stock Issued to Employees,"  and related  interpretations,  and
disclose the pro forma effects of its employee stock options on net loss and net
loss per  share.  Under APB  Opinion  No.  25,  when the  exercise  price of the
Company's employee stock options equals the market price of the underlying stock
on the date of grant, no compensation expense is recognized. For purposes of pro
forma disclosure,  the estimated fair value of the options is amortized over the
options'  vesting  period.  The  following  table  presents  the  effect  on the
Company's  net loss and net loss per share if the  Company  had applied the fair
value based method of accounting under SFAS No. 123:


<TABLE>
<CAPTION>

                                                        Three Months ended          Nine Months ended
                                                           September 30,               September 30,
                                                        2004          2003          2004          2003
--------------------------------------------------  -----------   -----------   -----------   -----------
<S>                                                 <C>           <C>           <C>           <C>
Net income (loss), as reported                      $    56,827   $  (957,513)  $(2,529,285)  $(1,342,465)

Deduct: Total stock-based employee compensation
 expense determined under the fair value of awards
 net of tax related effects                             664,649        40,791     1,439,731       122,372
                                                    -----------   -----------   -----------   -----------

Pro forma net (loss)                                $  (607,822)  $  (998,304)  $(3,969,016)  $(1,464,837)
                                                    ===========   ===========   ===========   ===========

Reported net loss per share-basic and diluted       $      0.00   $     (0.03)  $     (0.07)  $     (0.05)
                                                    ===========   ===========   ===========   ===========

Pro forma net loss per share-basic and diluted      $     (0.02)  $     (0.04)  $     (0.11)  $     (0.06)
                                                    ===========   ===========   ===========   ===========
</TABLE>


NOTE 4 - INVENTORIES

                                                                   September 30,
                                                                       2004
                                                                   ------------
Raw Materials                                                       $   59,393
Work-in-process                                                             --
Finished Goods                                                           3,454
                                                                    ----------
  Total inventory                                                   $   62,847
                                                                    ==========

<PAGE>


CIRCLE GROUP HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 5 - PROPERTY AND EQUIPMENT

                                                                   September 30,
                                                                        2004
                                                                   ------------
Leasehold improvements                                              $   611,530
Leasehold improvements - in construction                              1,309,589
Computer equipment and related software                                 305,417
Office equipment and furniture                                          597,711
Production, engineering and other equipment                              72,424
Production, engineering and other equipment - in construction         3,891,118
                                                                    -----------
                                                                      6,787,789
Accumulated depreciation                                               (919,833)
                                                                    -----------
  Total property and equipment                                      $ 5,867,956
                                                                    ===========

NOTE 6 - PURCHASED INTANGIBLE ASSETS, NET

During  the  first  nine  months  of  fiscal  2004,  no  significant  identified
intangible  assets  were  acquired  and no  identified  intangible  assets  were
impaired.  The  following  table  present  details  of the  Company's  purchased
intangible assets:

                                             Gross
                                            Carrying   Accumulated
                                             Amount    Amortization       Net
----------------------------------------   ----------  ------------   ----------
License Rights to
 Developed Technology                      $  420,000   $  (31,500)   $  388,500
 Website                                      200,000      (16,668)      183,332
                                           ----------   ----------    ----------

  Total intangibles                        $  620,000   $  (48,168)   $  571,832
                                           ==========   ==========    ==========

Amortization  of  intangibles  was $25,751 and $3,333 for the nine months  ended
September 30, 2004 and 2003, respectively.

Based on the carrying  amount of the  intangibles  as of September 30, 2004, and
assuming  no  impairment  of  the  underlying   assets,   the  estimated  future
amortization is as follows:

        Years ended December 31,
        ---------------------------------------------
        2004 (October 1, 2004 to December 31, 2004)          $    8,582
        2005                                                     34,333
        2006                                                     34,333
        2007                                                     34,333
        Thereafter                                              460,251
                                                             ----------
        Total amortization                                   $  571,832
                                                             ==========

Sale of Fair Play Mark
----------------------

On March 28, 2003, Veridisc Corporation ("Veridisc"),  a wholly-owned subsidiary
of the  Company,  entered  into an  agreement  to sell its Fair  Play mark to an
undisclosed  purchaser for a cash price of $150,000.  Veridisc  currently owns a
pending U.S. application for the mark FP FAIRPLAY PARTNER POWERED BY VERIDISC in
connection with its digital rights management product. The Company completed the
sale on April 4, 2003 and recognized a gain of $150,000.

<PAGE>


CIRCLE GROUP HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 7 - ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

                                                               September 30,
                                                                   2004
                                                               -----------
Accrued payroll                                                $    11,596
Accrued legal and professional fees                                485,110
Accrued liabilities-property and equipment                         836,115
Other accrued expenses                                             137,011
                                                               -----------
  Total accrued expenses and other current liabilities         $ 1,469,832
                                                               ===========

NOTE 8 - STOCKHOLDERS' EQUITY

Private Placement Offering
--------------------------

In March  2004,  the  Company  conducted  a  self-underwritten  offering  of the
Company's  common  stocks up to $5 million.  The stock was sold for $100,000 per
unit.  Each unit consists of 22,222 shares of common stock and 22,222  warrants.
The  warrants are  exercisable  at $6.00 per share and expire in three (3) years
after  purchase of the above  described  unit.  Through  September 30, 2004, the
Company sold  1,126,813  shares,  and received net proceeds of $2,761,175  and a
note  receivable  of $2.04  million.  The note bears zero interest and is due on
December 31, 2004.

In April  2003,  the  Company  conducted  a  self-underwritten  offering  of the
Company's common stocks up to $4,000,000. The stock was sold for $0.25 per share
with a minimum purchase of 100,000 shares or $25,000 per unit. Through September
30, 2003, the Company sold and issued  560,000  shares and received  $140,000 in
proceeds  under the  offering.  The Company also sold  700,000  shares of common
stock for $110,000 in cash.

Stock Subscriptions
-------------------

In 2003, the Company entered into two stock subscription agreements to conduct a
self-underwritten  offering  of the  Company's  common  stocks  with  detachable
warrants up to $1.45 million.  The number of shares  issuable to the holder will
equal the amount paid by the holder divided by the lesser of $0.25 or 50% of the
closing  price on the day of  closing,  but in no event  less  than  $0.20.  One
warrant will be issued to purchaser for every share purchased.  Warrants will be
exercisable  at a price equal to $1.50 and will expire on February 28, 2005. The
expiration  date will be extended for one year if the closing  price on February
28, 2005 is not at least $1.50 and will be extended to February  28, 2007 if the
closing price on the extended expiration date is not at least $1.50. The Company
agreed to pay the  underwriters  a 9%  compensation  of the total amount raised,
plus a flat  non-accountable  expense allowance to cover legal,  escrow fees and
miscellaneous  costs not to exceed  $7,500.  Through  September  30,  2003,  the
Company had received net proceeds of $979,220,  net of offering costs of $96,750
from the underwriters and had issued 442,857 shares of common stocks.

Retirement of Common Stock
--------------------------

During 2003, the Company  retired  103,600 shares of common stock and recognized
other income of $48,750 from the retirement. 18,600 shares were retired from its
former employees due to employment termination;  65,000 shares were retired from
a  consultant  due to service not  performed  and 20,000  shares were retired to
reduce an employee loan of $10,000.

Exercising of Stock Warrants and Options
----------------------------------------

During the first nine months of 2004,  there are  5,001,330  stock  warrants and
options exercised. The Company received $2,193,664 in cash and a note receivable
of $250,000 upon  exercising.  The note carries an interest rate of 5% per annum
and is pledged by the stocks. Principal and interest are due on June 30, 2006.

<PAGE>


CIRCLE GROUP HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 8 - STOCKHOLDERS' EQUITY (CONTINUED)

Subsidiary Stock Transactions
-----------------------------

On July 23, 2003,  the Board of Directors  approved the  redemption of all 1,000
shares of  Fiber-Gel  which was  acquired  in 2002,  and the  issuance of twenty
million  (20,000,000)  shares of common stock of  Fiber-Gel  with a par value of
$0.00005  per share.  The Board of  Directors  also  approved  to  increase  the
authorized common stock to fifty million (50,000,000) shares.

The Company conducted a private placement  offering of Fiber-Gel's  common stock
to raise $5,000,000. The stock was sold for $1 per share with a minimum purchase
of 50,000  shares for $50,000 per unit.  One warrant to purchase  the  Company's
common  stock at an exercise  price of $2 per share will be issued to  purchaser
for every Fiber-Gel's share purchased.

The Company complies with the requirement of SEC Staff  Accounting  Bulletin No.
51,  "Accounting  for Sales of Stock by a  Subsidiary,"  which requires that the
difference  between the carrying  amount of parent's  investment in a subsidiary
and the underlying net book value of the subsidiary  after the issuance of stock
by the  subsidiary  be  reflected  as either a gain or loss in the  statement of
operations  or  reflected as an equity  transaction.  The Company has elected to
record gains or losses  resulting from the sale of subsidiary's  stock as equity
transactions.

As of September  30, 2003,  the Company had sold 950,000  shares of  Fiber-Gel's
common stock and recorded an additional  credit to  stockholders'  equity in the
amount of $950,000.

NOTE 9 - SETTLEMENT GAIN

On July 26, 2004,  the Company  entered into an agreement in principle to settle
the lawsuit it filed against its former law firm in August 2001. Pursuant to the
terms of the  agreement,  the parties  have agreed to release  each other of all
claims in exchange  for a payment of $950,000  to the  Company.  The Company has
received the settlement in full.

NOTE 10 - NET LOSS PER SHARE

The following table sets forth the computation of basic and diluted net loss per
share:

<TABLE>
<CAPTION>
                                                        Three Months ended                Nine Months ended
                                                           September 30,                    September 30,
                                                       2004            2003             2004             2003
================================================ =============== ================ ================ ==============
Numerator:
================================================ =============== ================ ================ ==============
<S>                                                <C>             <C>              <C>              <C>
  Net income (loss)                                $     56,827    $   (957,513)    $ (2,529,285)    $ (1,342,465)
================================================ =============== ================ ================ ==============
Denominator:
================================================ =============== ================ ================ ==============
  Weighted average number of shares outstanding      38,844,872      27,620,651       36,913,063       25,961,513
================================================ =============== ================ ================ ==============

================================================ =============== ================ ================ ==============
Net income (loss) per share-basic and diluted      $       0.00    $      (0.03)    $      (0.07)    $      (0.05)
================================================ =============== ================ ================ ==============
</TABLE>

As the Company incurred net losses for the nine months ended September 30, 2004,
the  effect  of  dilutive  securities  totaling  1,932,701   equivalent  shares,
respectively,  has been excluded from the  calculation of diluted loss per share
because their effect was  anti-dilutive.  As the Company incurred net losses for
the three and nine  months  ended  September  30,  2003,  the effect of dilutive
securities totaling 3,996,348 and 3,781,203 equivalent shares, respectively, has
been  excluded  from the  calculation  of diluted loss per share  because  their
effect was anti-dilutive.

<PAGE>


CIRCLE GROUP HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 11 - PRIOR PERIOD RESTATEMENT

The  accompanying  consolidated  statements of operations for the three and nine
months ended  September 30, 2003 have been restated to reclassify a discontinued
operation  into  continuing  operations.  During the third quarter of 2003,  the
Company sold 20% of its ownership in CGI Capital to  Rothschild,  Owen,  Hayes &
Partners,  Inc. (the  "Purchaser") for $15,000 in cash, and expected to sell the
remaining 80% by the end of the year,  subject to the NASD  approval.  A gain of
$8,635  was  realized  during  the  third  quarter  of 2003,  and the  Company's
consolidated   financial   statements  for  all  periods   presented  have  been
reclassified to reflect CGI Capital and the e-finance business as a discontinued
business  segment  in  accordance  with SFAS 144.  At  December  31,  2003,  the
purchaser  declined to purchase the  remaining  80% ownership in CGI Capital and
surrendered the 20% ownership it has acquired. Accordingly, the Company reversed
the gain of $8,635 in the fourth  quarter and  recognized  the cash  proceeds as
other income.  The Company restated the operations CGI Capital and the e-finance
business segment back to continuing operations.

NOTE 12 - RELATED PARTY TRANSACTIONS

In February  2004,  the Chairman of the Board of Director  exercised his 720,000
stock options at $0.05 per share, or aggregate of $36,000.  The Company received
$8,000 in cash and the  balance  of $28,000  was  charged  as  payments  for his
service rendered.

In August  2003,  the  Chairman of the Board of Director  exercised  his 645,000
stock  options at $0.30 per share.  The total  proceed of  $193,500  was debited
against the note payable and accrued interest owed to the Chairman.

NOTE 13 - WITHDRAWAL FROM REGISTRATION AS A BROKER-DEALER

On January 27, 2004, the Company's wholly-owned  subsidiary,  CGI Capital, Inc.,
filed an application of withdrawal from registration as a broker or dealer.  The
application is subject to SEC approval.

NOTE 14 - NEW BUILDING LEASE

In March 2004, the Company has leased the remaining  22,000 square feet of space
located  adjacent to its executive  offices in Mundelein,  Illinois as part of a
planned expansion of its Z-Trim(TM) production capacity.  The new lease requires
monthly rental payments of $20,000 and expires in March 2007.  Taxes,  insurance
and maintenance are billed when due.

The future minimum annual rental payments under the new lease are as follows:


           Year ended December 31,                            Amount
           ----                                             ----------
           2004 (October 2004 to December 2004)             $  60,000
           2005                                               240,000
           2006                                               240,000
           2007                                                60,000
                                                            ---------
                                                            $ 600,000

<PAGE>


CIRCLE GROUP HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 15 - GUARANTEES

The Company  from time to time  enters  into  certain  types of  contracts  that
contingently  require  the  Company to  indemnify  parties  against  third party
claims. These contracts primarily relate to: (i) divestiture  agreements,  under
which the Company may provide  customary  indemnifications  to purchasers of the
Company's businesses or assets; (ii) certain real estate leases, under which the
Company may be required to indemnify property owners for environmental and other
liabilities,  and other claims  arising from the Company's use of the applicable
premises;  and (iii) certain agreements with the Company's  officers,  directors
and employees, under which the Company may be required to indemnify such persons
for liabilities arising out of their employment relationship.

The terms of such  obligations  vary.  Generally,  a maximum  obligation  is not
explicitly  stated.  Because the obligated  amounts of these types of agreements
often are not explicitly  stated,  the overall maximum amount of the obligations
cannot be reasonably estimated. Historically, the Company has not been obligated
to make significant payments for these obligations, and no liabilities have been
recorded for these obligations on its consolidated balance sheet as of September
30, 2004.

In general,  the Company offers a one-year  warranty for most of the products it
sold. To date, the Company has not incurred any material costs  associated  with
these warranties.

NOTE 16 - SEGMENT INFORMATION

The Company  evaluates its reporting  segments in accordance  with SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information." The Chief
Executive  Officer has been identified as the Chief Operating  Decision Maker as
defined by SFAS No. 131. The Chief Executive Officer allocates resources to each
segment based on their business prospects,  competitive  factors,  net sales and
operating results.

The Company  currently  reported four  principal  operating  segments:  (i) Food
Product Development,  (ii) Security Training and Products,  (iii) E-tailer,  and
(iv)  Business  Consulting.  The  food  product  development  segment  owns  the
exclusive,  worldwide  license to Z-Trim.  The  Security  training  offers  cost
effective  self-defense  training courses and products with a uniquely  targeted
curriculum.  The e-tailer  segment is a distributor  of pillows,  blankets,  and
other bedding products. The business-consulting segment develops distinctive web
sites and provides  business-consulting  services for the Company's wholly owned
subsidiaries. The Company no longer reports segment information in the e-finance
and software development division.  The Company also has other subsidiaries that
do not meet the quantitative thresholds of a reportable segment.

The  Company  reviews  the  operating  companies'  income  to  evaluate  segment
performance  and  allocate  resources.   Operating  companies'  income  for  the
reportable segments excludes income taxes, minority interest and amortization of
goodwill. Provision for income taxes is centrally managed at the corporate level
and,  accordingly,  such  items are not  presented  by  segment.  The  segments'
accounting  policies  are  the  same  as  those  described  in  the  summary  of
significant accounting policies.

Intersegment transactions: Intersegment transactions are recorded at cost.

<PAGE>


CIRCLE GROUP HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 16 - SEGMENT INFORMATION (CONTINUED)

Summarized financial information of the Company's results by operating segment
is as follows:

<TABLE>
<CAPTION>
                                                Three Months ended              Nine Months ended
                                                   September 30,                   September 30,
                                               2004            2003            2004            2003
======================================================================== =============================
<S>                                        <C>             <C>             <C>             <C>
Net Revenue:
  Food Product Development                 $     2,762     $        --     $    49,111     $        --
  Security Training and Products                   239             996           2,268          16,364
  E-tailer                                     171,884         127,395         437,530         453,788
  Business Consulting                             (476)          2,392          28,027          60,720
======================================================================== =============================
  Total Net Revenue                        $   174,409     $   130,783     $   516,936     $   530,872
======================================================================== =============================
Operating Income (Loss):
  Food Product Development                 $  (228,609)    $   (58,187)    $  (814,167)    $  (125,677)
  Security Training and Products                   185          (5,181)          1,958           7,380
  E-tailer                                       5,278          37,106           1,693          32,838
  Business Consulting                         (681,412)       (925,445)     (2,702,548)     (1,488,277)
                                           ---------------------------     ---------------------------
Operating (loss) by reportable segments    $  (904,558)    $  (951,707)    $(3,513,064)    $(1,573,736)
All other operating (loss)                      (3,344)         (3,418)        (10,062)        (10,273)
======================================================================== =============================
Consolidated operating (loss)              $  (907,902)    $  (955,125)    $(3,523,126)    $(1,584,009)
======================================================================== =============================
Net Income(Loss) before tax:
  Food Product Development                 $  (228,609)    $   (58,187)    $  (814,167)    $  (125,677)
  Security Training and Products                   185          (5,181)          1,958           7,380
  E-tailer                                       5,158          37,079           1,774          33,603
  Business Consulting                          283,437        (927,807)     (1,708,788)     (1,247,501)
                                           ---------------------------     ---------------------------
Net (loss) by  reportable segments         $    60,171     $  (954,096)    $(2,519,223)    $(1,332,195)
All other net (loss)                            (3,344)         (3,417)        (10,062)        (10,270)
======================================================================== =============================
Consolidated net loss before Tax           $    56,827     $  (957,513)    $(2,529,285)    $(1,342,465)
======================================================================== =============================
</TABLE>

                                                   September 30,
       Total Assets:                           2004              2003
       ------------------------------------------------------------------
       Food Product Development            $  5,519,425      $         --
       Security Training and Products            11,772             7,031
       E-tailer                                 149,670           158,683
       Business Consulting                    1,541,077         2,632,682
                                           ------------------------------
                                              7,221,944         2,798,396
       All other segments                        20,650            34,145
                                           ------------------------------

       ==================================================================
       Consolidated assets                 $  7,242,594      $  2,832,541
       ==================================================================

<PAGE>


                                   SIGNATURES

        In accordance with the  requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                        CIRCLE GROUP HOLDINGS, INC.
                                        (Registrant)

Date:  November 10, 2004
                                         By:  /s/ Gregory J. Halpern
                                              ----------------------------------
                                              Gregory J. Halpern, President and
                                              Chief Executive Officer

                                         By:  /s/ Dana L. Dabney
                                              ----------------------------------
                                              Dana L. Dabney, Chief Financial
                                              Officer

<PAGE>


                                  EXHIBIT INDEX

Exhibit No.      Description
-----------      -----------

    3.3*         Amendment to Articles of Incorporation of the Company filed on
                 June 25, 2004.

   31.1*         Statement Under Oath of Principal Executive Officer of the
                 Company Pursuant to Section 302 of Sarbanes- Oxley Act of 2002

   31.2*         Statement Under Oath of Principal Financial Officer of the
                 Company Pursuant to Section 302 of Sarbanes- Oxley Act of 2002

   32.1*         Statement Under Oath of Principal Executive Officer of the
                 Company Pursuant to Section 906 of Sarbanes-Oxley Act of 2002

   32.2*         Statement Under Oath of Principal Financial Officer of the
                 Company Pursuant to Section 906 of Sarbanes-Oxley Act of 2002

---------------------
* Filed herewith.